Do You Know the Value of Your Business?
(98% of business owners don’t)
If you’re like most business owners, you probably don’t know what your business is worth. In fact, recent studies show that 98% of business owners don’t know the value of their own business. On top of that, when those same business owners were asked about their exit strategy, they admitted that they expect the monetized value of their business to fund anywhere from 70-80% of their retirement.
Think about that: most business owners expect 70-80% of their retirement to be funded by the value of their business. But they have no idea what their business is worth.
Most business owners would agree that doesn’t make any sense. So why don’t most owners know the value of their business?
It’s expensive to find out: it can cost anywhere from $8,000 -$15,000 on average.
It’s time-consuming, taking from one to three months.
It can be intrusive and viewed as a hassle.
It only seems important when a specific event occurs, such as the death of a shareholder.
When do owners typically invest in a business valuation?
Owners who do choose to get a valuation report on their business say it’s driven by:
Getting ready to sell the business and plan for retirement
Desire to protect themselves and other shareholders (such as creating a buy-sell agreement)
Planning to grow the business via funding through capital or private equity
Working on estate planning
Creating a succession plan to pass on the business
Considering a business acquisition
Considering gifting share in their business
At Legacy Advisors Network, we believe that ALL business owners should know the value of their business!
It’s our mission to “democratize” business valuation, making it easy and affordable for every owner to know the value of their business.
In this process, we use the four traditional business valuation methodologies:
Equity value
Asset sale value
Enterprise value
Liquidation value
But wait. You may wonder how your business compares to others.
Often when I work with business owners, beyond the value of their business, they want to know how they compare to other businesses in their industry. Our report provides just that. Beyond an objective analysis on your business’ worth, we show you how your business compares to similar ones in your industry, focusing on specific Key Performance Indicators or KPIs.
True story from a client skeptical about business valuation…
I remember trying to convince Chuck Ellis, co-owner and president of Pearl Valley Cheese, that he needed a business valuation. He was resistant—until he realized how crucial this is in planning for the future, including retirement.
Here’s what Chuck said later:
“Getting outside expertise has been invaluable. I was concerned at my first meeting with Mark when he asked me what the business was worth. I’ll never forget the conversation because I told him it didn’t matter—I wasn’t going to sell it. He said, ‘Well, you have to have some idea.’
I kept telling him it was not for sale, but he kept asking me the value of the business. It made me skeptical that maybe he was a plant for someone wanting to buy our business! That wasn’t the case. He was getting me to think through what our business was worth so I could plan wisely.
When you’re running a business, you don’t step back and think about that very often. Mark enabled me to do that. And now I trust him. He’s been very helpful. I am approaching retirement in a much better position than I could have five years ago.”
Ready to find out the value of your business?
It’s simple. Contact LAN. There’s never a bad time to work on your business. It begins by knowing the value of your business.